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Update on GREC Mediation and Arbitration (B)
explanation
At its meeting on December 20, 2012, the City Commission considered an agenda item titled “Request for Authorization to Submit a Claim to Arbitration with GREC” (Legistar #120641). In summary, GRU staff and outside legal counsel explained to the Commission that on December 30, 2011, GREC transferred a controlling ownership interest in GREC, as contemplated in Section 27.3 of the Power Purchase Agreement (“PPA”); that GREC did so without first giving GRU proper notice and the opportunity to prepare an offer to purchase the facility as required by Section 27.3 of the PPA; the same constituted a breach of Section 27.3; and recommended that GRU seek specific performance of the PPA (i.e., directing GREC do what it should have done under the contract, which is giving GRU the opportunity to make an offer to purchase). Section 24 of the PPA requires disputes to be settled by binding arbitration. The City Commission approved, by a vote of 7-0, the GRU staff recommendation to “(1) authorize the General Manager for Utilities, or his designee, to submit the claim to arbitration; and (2) authorize the General Manager or his designee, during the pendency of the arbitration, to negotiate with GREC a potential commercial resolution of the claim on terms mutually agreeable to the parties, subject to final approval of the City Commission and subject to City Attorney’s opinion as to form and legality.”
The General Manager retained outside counsel to represent the City in the arbitration. On December 21, 2012, the City’s outside counsel filed a Demand for Arbitration. The Demand recites the pertinent facts and states the relief sought pursuant to the PPA, namely that “GRU seeks relief against Respondents as follows: a) finding that Respondents have breached Section 27.3 of the PPA by failing to provide GRU with a Right of First Offer to purchase the Facility; b) ordering specific performance of the Right of Firs...
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